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1099 Information Returns (All Other)

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I received a Form 1099-G, for my state tax refund. Do I have to include this amount as income on my return?

If you itemized deductions on your Federal tax return for 2001, and received a refund of state or local taxes in 2001, you may have to include all or part of the refund as income on your 2002 tax return.

If you did not itemize your deductions on your Federal tax return for the same year as the state or local tax refund applies to, do not report any of the refund as income. Refer to Tax Topic 405, Refund of State and Local Taxes, and Publication 525 (PDF), Taxable and Nontaxable Income, for further information.

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How do I report income received as a prize or award?

If you win a prize in a lucky number drawing, television or radio quiz program, beauty contest, or other event, you must include it in your income. For example, if you win a $50 prize in a photography contest, you must report this income on line 21 (other income), Form 1040. If you receive merchandise, you must report the fair market value of the item(s) as income. Refer to Chapter 13 of Publication 17 (PDF), Your Federal Income Tax, for additional information.

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I won $250 in a charity raffle. Where do I show this on my return?

Gambling winnings are fully taxable and must be reported on your tax return. You must file Form 1040 (PDF) and include all your winnings on line 21 (other income). For information on deducting gambling losses. Refer to Tax Topic 419, Gambling Income and Expenses, orPublication 529 (PDF), Miscellaneous Deductions,.

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My house was foreclosed on and the lender has sent me a Form 1099. What do I do? Must I report this?

You may have received either a Form 1099A (PDF), Acquisition or Abandonment of Secured Property, or Form 1099C (PDF), Cancellation of Debt, or both. You must compute whether you have cancelled debt income. You have cancelled debt income if the debt cancelled, is debt for which you are personally liable and it exceeds the fair market value of the property at the time of the transfer. Cancelled debt income is taxable as other income on line 21 (other income) of Form 1040 (PDF). Refer to Publication 544 (PDF), Sales and Other Disposition of Assets. Complete Table 1-2, Worksheet for Foreclosure & Repossessions to determine if there is income from cancellation of debt or gain or loss from foreclosure or repossession.

You may be able to exclude cancelled debt income if all or part of the debt was discharged in bankruptcy; you are insolvent; or the debt is a qualified farm debt. Refer to Publication 908 (PDF), Bankruptcy Tax Guide, and Form 982 (PDF), Reduction of Tax Attributes Due to Discharge of Indebtedness for more information.

You are also required have to compute gain or loss on disposition of the property. You must still follow this step even if you have no discharge of indebtedness income. The difference between the sum of the amount of money received, the Fair Market Value of any other property received incident to the transfer of the property subject to foreclosure, and the amount of any nonrecourse debt from which you are relieved, and your adjusted basis in the property is your gain or loss. No portion of the gain on property which subject only to nonrecourse debt is treated as cancellation of indebtedness income. The amount realized includes any nonrecourse debt from which you are relieved in the transaction. If the property foreclosed was subject to recourse debt, the gain or loss on the disposition of the property is the difference between the FMV of the property and your adjusted basis in the property. The amount of recourse debt in excess of the FMV of the property will constitute cancellation of indebtedness income if the debt is forgiven. If the property is business property, report it on Form 4797 (PDF), Sales of Business Property, and follow the normal rules. If the property is a personal home, report it on Form 1040, Schedule D (PDF) if you have taxable gain following the normal rules for sale of a main home. Refer to Publication 523 (PDF), Selling Your Home, and Publication 544 (PDF), Sales and Other Dispositions of Assets, for more information.

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